Stocksp24: With the collaboration of the computer platform specialized in Trading (Stocksp24), we analyze the latest developments in the Mexican economy
In the last quarterly report, the Central Bank of Mexico projected an economic recovery of 3.3 percent for 2021, after the crisis generated by the pandemic during the first 7 months of 2020. The authorities also explained that, for growth and GDP consolidation, an increase in foreign demand should be generated, fiscal stimuli in some countries with which there are commercial operations, and some restrictions on mobility, are the main factors that will affect the gross domestic product.
An important aspect to verify the real solidity of the GDP is inflation, on which the BANXICO authorities project a closing of the last quarter of this year at 3.6 percent, while the same period of the following year would end in 3.1 percent, according to Stocksp24 analysts. In their estimates, the banking authorities prefer moderation and even expressed concern about the persistence of a re-outbreak of Covid-19 infections, which would affect the local economy, which, as reported yesterday, has fallen by 8, 6 percent so far this year.
The Central Bank of Mexico has maintained its benchmark interest rate at 4.25% during this month, after a divided decision with the government, arguing that the pause in the downward cycle seeks to return the trajectory of inflation to its goal of 3%. The report states confidence in the economic recovery for the coming months, but slowly and gradually. Despite the fact that inflationary indices did not skyrocket in relation to the effects of the pandemic, it is estimated that it will continue to increase, beyond the fact that during the first half of November, year-on-year inflation decelerated, to 3.43 percent, as a result of of the “Buen Fin” discount program, thus registering a minimum after five months.
The concern appears when analyzing the year-on-year indices – they add on Stocksp24.com, as activity still remains below pre-pandemic levels. During the January-October 2020 period, GDP was 10 percent less than the index registered for the same period during 2019. These data, which can be seen in the July-September quarterly report, are what lead the authorities of the Monetary house to project a difficult and slow rebound, so returning to pre-pandemic levels appears as the main one for the Central Bank of Mexico.
Beyond these indicators, what is relevant in the report is that Banxico for the first time this year improved the economic growth forecast for Mexico, ranging from 12.8 percent to 9.3 percent. On the other hand, the best estimated scenario expects a drop of 8.7 percent by the end of the year. By 2021, Banxico projects that the Mexican economy will grow between the 0.6 to 5.3 percent range. For 2022, the maximum rate is lower, but with more solid numbers, thus projecting a growth range between 2.6 and 3.8 percent.